Repayment vehicle for intererst only help?

getmore4less

foxyuk wrote: »

sorry i dont get your reply .....

i can get 3% on an easy access bank account so if i dont touch the money the interest will offset my mortgage interest only payments...

ltv is 35% and intend to move again in 5 years time and clear my mortgage off....

repayment is £740 odd and interest only is £275 max....

its a no brainer and as you know the 1st 18 months on a repayment the capital doesnt reduce so over the 5 year period i would be worse off on a repayment... as i also intend to overpay


the whole things a farce.... at end of day the bank owns the house till the day u pay off mortgage so at under 40% ltv and a joint salary of £50 k a year . ... wots there problem??

If your mortgage rate is more than saving net rate you are losing money by saving rather than a repayment.

If your statement in bold was true then why contradict it by saying you will overpay.

A capital payment be it by repayment or overpayment amounts to the same thing.

handytips

The other thing to consider is this, and mortgage advisor either Bank based or Brokerage, will assess your affordability via a budget planner, what would ring a few bells with me is your intention of overpaying, opening an ISA etc etc, if the budget planner gives you enough excess to afford a repayment mortgage then in accordance with guidelines the advisor will have to explain to compliance why a repayment mortgage wasnt chosen. I am only playing devils advocate here, i am a mortgage advisor and i would Certainly be reccomending a repayment deal for you.
As for lenders accepting 'Sale of Property' as the repayment vehicle is debatable, and remember certain lenders reserve the right to change an interest only mortgage to a repayment mortgage without notice. So affordability at the repayment rate is paramount. I understand some of this sounds restrictive, however we all have to dance to the tune of the FSA, i just wonder sometimes how do the General Public view the FSA, as i think i would be right in saying those of us in the Industry find it very Draconian.

dimbo61

On a short term of only 5 years you would be paying off the capital from day one
I think the statement " you only pay interest for the first 18 months" is for 25/30 year terms

kingstreet

After five years of the following initial terms, you would have repaid the percentage of the initial mortgage as shown;-


15 years - 25%

20 years - 16%

25 years - 11%

30 years - 8%

35 years - 6%

Capital and interest mortgage using 4.99%, 5 year fix with Abbey.

foxyuk

handytips wrote: »

The other thing to consider is this, and mortgage advisor either Bank based or Brokerage, will assess your affordability via a budget planner, what would ring a few bells with me is your intention of overpaying, opening an ISA etc etc, if the budget planner gives you enough excess to afford a repayment mortgage then in accordance with guidelines the advisor will have to explain to compliance why a repayment mortgage wasnt chosen. I am only playing devils advocate here, i am a mortgage advisor and i would Certainly be reccomending a repayment deal for you.
As for lenders accepting 'Sale of Property' as the repayment vehicle is debatable, and remember certain lenders reserve the right to change an interest only mortgage to a repayment mortgage without notice. So affordability at the repayment rate is paramount. I understand some of this sounds restrictive, however we all have to dance to the tune of the FSA, i just wonder sometimes how do the General Public view the FSA, as i think i would be right in saying those of us in the Industry find it very Draconian.

why would u suggest a repayment ... my ltv is only going to be 34% , i dont intend to be in the house long term and when i sell it i will pay off mortgage again and downgrade.

what are the advantages of repayment ....??? having paid £0 for 6 years mortgage free id rather pay £280 per month than £750

Thrugelmir

foxyuk wrote: »

sorry i dont get your reply .....

i can get 3% on an easy access bank account so if i dont touch the money the interest will offset my mortgage interest only payments...

l

Where are you going to get a mortgage at 3% interest rate from?

foxyuk

Thrugelmir wrote: »

Where are you going to get a mortgage at 3% interest rate from?

halifax, santander, nationwide all do delas under 3%

C_Mababejive

kingstreet wrote: »

Halifax has recently tightened its criteria on interest-only mortgage repayment vehicles.

Here's a link to the Q&A on the intermediary site;-

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_interest_only_repayment_calculator/interest_only_q_and_a/default.aspx

this is of course an example and the actual procedure will depend on your choice of lender.

I'm a little confused by this...i had a look at this interest only calculator..selected the..ISA and entered £24,000 with a term of 18 years.. and it says something like £420,000 available... This clearly doesnt mean that they will advance me nearly half a million bucks to spend on a property so what does it mean and what is the link to the ISA? The isa isnt going to be worth anything like that money is 18 years time !

kingstreet

I hadn't played with the calculator until your post, so I can't tell you the reasoning behind £24k turning into £420k in 18 years time. To be honest, I was more concerned at covering the acceptable repayment vehicles and how they would be evidenced, than how they would calculate the amount a particular plan would cover.

Fair question. Sorry I don't have the answer.

Ms_Sophia

C_Mababejive wrote: »

I'm a little confused by this...i had a look at this interest only calculator..selected the..ISA and entered £24,000 with a term of 18 years.. and it says something like £420,000 available... This clearly doesnt mean that they will advance me nearly half a million bucks to spend on a property so what does it mean and what is the link to the ISA? The isa isnt going to be worth anything like that money is 18 years time !

I haven't looked at the calculator but it seems that it requires to enter your annual savings. I.e. if you enter ~£24k for 18 years, it simply multiples 24 x 18 = £432k which is close enough to your £420k number. So you need to enter your annual savings rather than your existing 'lump sum' saving.